It is crucial to monitor a number of aspects of your business in order to ensure efficiency. Otherwise you may not pick up on practices that are no longer working, or that could be streamlined. There are a variety of different metrics that are important to consider when measuring business effectiveness, and tracking the ongoing needs of your staff. It is, of course, essential to decide which metrics are most relevant to your business and likely to highlight the key information you require in order to make changes going forward. After all, that is the goal when tracking the efficiency of your HR activities.

 

If you're not sure where to start then here are our suggestions for key aspects to measure and ensure your business is well-organised.

Hiring
In the first instance, it's important to track how effective your recruitment processes are. There are a few different ways to analyse this, including cost per hire [(internal costs + external costs) ÷ number of hires] which helps you to gauge exactly how much each employee costs your business when acquiring them. This figure can help you to highlight areas that are pushing this cost up, and therefore help you to reduce it. There's also yield ratio, which can help you to track how many applicants make it through to the next level of the recruitment process – a highly useful metric that can help you to decide whether you're interviewing the correct number of applicants, or if your selection process is too stringent.

Employee Base
Once you've considered your methods of attracting new employees it's important to monitor how effectively you're utilising your existing ones. It is not enough to keep new acquisitions at low cost, but you must also aim to retain the members of staff you've already acquired. Key figures to monitor here include absence rate, satisfaction rating, staff turnover, and staff performance levels. These will help you to assess the productivity of your business and avoid further recruitment costs.

 

For example, if you have a company-wide high absence rate [number days absent in month ÷ (average number of employees during a month x number of workdays)] then there's clearly an issue that needs addressing. However, if this is significantly higher in one department than in others, then you need to ask why, and start doing some focussed absence management. Keeping an eye on staff satisfaction alongside staff turnover and performance will give you a much more comprehensive picture of the happiness of your employees than any one of these figures could do on in isolation.
 

Tracking
Once you've decided which metrics are most relevant for you, then you need to decide how you want to record them, analyse them, and draw upon them to predict the upcoming requirements of your business. There is little point in tracking statistics like these unless you are going to use them to try and make your business more efficient; whether it is by reducing the 'cost per hire', or increasing job satisfaction and thus reducing the turnover rate. The end result of any of these metrics is to reduce your overall business costs and ensure that your HR department is working to maximum efficiency.

The easiest way to ensure you're monitoring the HR functions of your business effectively is to track a number of these metrics simultaneously – a difficult feat if you have to manually record each one. Using the right HR software can make it far easier to meet the needs of your growing business and ensure that these figures are not only recorded accurately, but also that they are presented in a coherent fashion. High quality HR software can monitor these metrics for you on a regular basis, making this information readily available and easy to access.

It's important to remember that the statistics discussed here are just a few basics; this article is certainly not exhaustive. Once you've begun tracking these kinds of metrics it'll be far easier for you to identify other, more specific areas you want to hone in on. These are an excellent starting point and will give a fairly comprehensive overview of your HR functions as a whole. It's up to you to develop your HR analysis in order to streamline your business and ensure productivity is at its peak.